The Influence of Global Stock Index and the Economic Indicators of Stock Investment Decision by Foreign Investors in the Indonesian Stock Exchange

Journal of Finance and Banking Review, Vol. 2(1), p. 32-37, Jan-Mar 2017

6 Pages Posted: 17 Jul 2017 Last revised: 20 Jul 2017

Date Written: January 19, 2017

Abstract

Objective - The objective of this study is to determine how the movement of several indices and indicators of the global economy affect the change in investment by foreign fund flows in the Indonesia Stock Exchange (BEI).

Methodology/Technique - Some global stock indices used in this study comprise the Dow Jones index, the Nikkei 225 index, the Shanghai index (SSE) and the Singapore Index (STI). Data were taken monthly from March 2009 to June 2014.

Findings - The results obtained from this study indicate that the Dow Jones index and the STI index have a significant positive effect on the movement of foreign investments in the Stock Exchange. In contrast, the movement of world oil prices and exchange rate of the IDR/USD have a significant negative effect on the movement of foreign investments in the BEI.

Novelty - The results of this study reinforces that the depreciation of the rupiah against the USD is an indication that the fundamentals of the Indonesian economy is not strong enough.

Keywords: Dow Jones, Nikkei 225 Index, Shanghai Index (SSE), STI Index, World Oil Prices, World Gold Price, Exchange Rate IDR/USD

JEL Classification: E31, E44

Suggested Citation

Nidar, Sulaeman Rahman and Diwangsa, Erwin Jaya, The Influence of Global Stock Index and the Economic Indicators of Stock Investment Decision by Foreign Investors in the Indonesian Stock Exchange (January 19, 2017). Journal of Finance and Banking Review, Vol. 2(1), p. 32-37, Jan-Mar 2017, Available at SSRN: https://ssrn.com/abstract=3000715

Sulaeman Rahman Nidar (Contact Author)

Padjadjaran University ( email )

Jl. Dipatiukur 35
Bandung, West Java 40132
Indonesia

Erwin Jaya Diwangsa

Independent ( email )

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